"The cult of the omnipotent state has millions of followers in the united States. Americans of today view their government in the same way as Christians view their God; they worship and adore the state and they render their lives and fortunes to it. Statists believe that their lives -- their very being -- are a privilege that the state has given to them. They believe that everything they do is -- and should be -- dependent on the consent of the government." ~ Jacob Hornberger

Wheat and Chaff

'His winnowing fork is in his hand, and he will clear his threshing floor, gathering his wheat into the barn and burning up the chaff with unquenchable fire.' ~ Matthew 3:12

So much of life is about: (1) making distinctions; and (2) making choices. Indeed, the meaning and consequence of all our lives can fairly be said to be a test of our free will choices and the rational, intellectual distinctions we make in choosing between free will courses of action. Two identically smart, identically diligent people making nearly identical choices can arrive at very different places based on the distinctions they make in choosing a course of action. For example, two very smart, productive individuals may have earned and been able to 'save' $200,000 over the last decade. One smart person may have put that money into the stock market in a government-blessed peculium, like a 401(k) or IRA. The other person may have allowed that $200,000 to run through the federal tax gauntlet, paid his 30 percent tithe to the state, and used his net $140,000 to buy, as just an example, gold. Although both people are smart and may be equally honest and upstanding, each makes his decision based on different assumptions. The first assumes that the fiat paper-denominated market is safe and takes no heed or notice of government rules, regulations and fines that compel his actions. He trusts his rulers and perhaps does not understand how his actions support things that he finds morally abhorrent. When his rulers tell him that his paper is fire-proof or that they can control the unquenchable fire, he believes them. The second assumes, for perhaps a myriad of reasons, that his tangible gold (a bird in the hand) is better than paper notes or computerized digits. He knows that his rulers are fallible men just like him and so distrusts them when they tell him that their paper is fire resistant. Their attempts to coerce him to act in a certain way only heightens his suspicions.

That is life, isn't it? Upon whom and what we place our trust and faith says everything about us. If we do not challenge basic assumptions and question everything, we risk getting burned with the chaff.

In Bearing False Witness, I promised to provide readers with more insights into the history, development, structure and logic of the Code. Before I get started I want to note that, in response to Bearing False Witness, a website called quatloos.com said some nasty things about me and threw me under the 'crazy' bus for calling great men like Irwin Schiff political prisoners. By the miracle of modern technology and Google Analytics, I can provide a little factual information about quatloos. On the day of quatloos attack, I had two website hits from Ogden , Utah , the IRS 's grand central station. Unlike the other visitors to my site that day, these two Ogden , Utah visitors visited every page of my hokey little website and spent a lot of time on each page. Coincidentally, also on this day two anonymous (they are so brave) quatlooos posters reproduced information found only on my webpages. Now, it is certainly possible that two nice, honest and upright individuals from Ogden , Utah who are not IRS employees separately and independently scoured my website and also that both individuals happen to regularly and anonymously post on the pro- IRS quatloos site. If that is the case, when they attack this piece they will no doubt use their real names and provide their contact information so together we can find the truth. J But seriously, quatloos' sponsor is apparently a California attorney named Jay David Adkisson. Mr. Adkisson touts strategies for 'asset protection.' Mr. Adkisson has the unique (as in I know of no one and an internet search reveals no one) distinction of having received the IRS 's Certificate of Appreciation. Mr. Adkisson unfortunately lost an eye to cancer. When I read that, I was reminded of this passage:

The lamp of the body is your eye. When your eye is sound, then your whole body is filled with light, but when it is bad, then your body is in darkness.

Is Mr. Adkisson's lost eye evidence of damage he has done to his soul by striking some sort of deal with the IRS? I wouldn't presume to know. A better bet is that his remaining eye is evidence of an infinitely merciful God.

So who is this Bill Butler and why should I listen to him? I don't pretend to be perfect, but I am an honest and diligent student of law, economics and history. I have accomplished very little other than to be blessed with four perfect children. The oldest is a senior on the Dean's List at Northwestern University , an exceptional athlete, great friend and a generous soul. Ditto number two, he is also a National Merit Scholar finalist and freshman at the University of Wisconsin . Numbers three and four are still in the pipeline but so far on course. If you want to know more, shoot me an e-mail. Unlike quatloos, I am not faking it.

A BRIEF HISTORY

A summary understanding of the Code and its operation is that it is actually a benign, 1913 law that is written to apply only within the legal, logical and moral confines of the United States Constitution. However, whether by accident or design, that benign law has been used by a gang of intellectually dishonest and morally bankrupt left and right Progressivists to force words to mean what they do not and cannot mean, with the result that innocent people are imprisoned for tax crimes that have no Constitutional, much less moral, foundation. These Progressivists, many of whom are federal judges, are both Republican and Democrats who willfully misinterpret, misapply and misrepresent logic, law, history and the Bill of Rights to achieve their statist, political ends.

Understanding the Matrix that is the federal income tax code is not easy. It is possible that more than one good-hearted federal judge never had the time or inclination to challenge its foundations. To meaningfully analyze the Code, one must have not only some basic intellectual tools'an understanding of grammar and logic'but also an understanding of history, money, economics, the Constitution, the Declaration of Independence and the Bill of Rights. Understanding how it could be that Irwin Schiff is in jail when the IRS Emperor has no clothes is not possible without both a foundation of basic, solid intellectual tools and also an understanding of the classical liberal roots of this nation. This series is meant to provide a short course enlightening people to these principles so the reader fully understands, for example, that when a federal, positive law statute says 'includes' and then lists items 51, 52, 53, 54 and 55, and the statute does not include items 1 through 50, why that statute cannot be construed to include items 1 through 50.

INTRODUCTION TO DIRECT AND INDIRECT TAXES

At the time of the founding of the United States there were two kinds of taxes'direct and indirect. Direct taxes, sometimes called capitation or 'head' taxes, directly taxed people or property. According to Article I, section 8 of the Constitution, all direct taxes must be 'apportioned.' This was not changed by the 16th Amendment, which does not tax people or property, but authorizes a non-apportioned tax on 'incomes.' But more on that later. What apportionment meant at the founding was that each state would be required to pay its fair share based on it percentage of the total people or property taxed. For example, if the total federal levy was 100 and New York had 10 percent of seats in House of Representatives, New York would pay ten percent of the total bill. In practice, this required the 50 sovereign states to collect the federal tax from their citizens and then send the state-collected total to the federal government. This voluntary, cooperative collection method ended in 1860 when the federal government, in violation of the express provisions of the Constitution, invaded several states to compel the collection of federal tariffs to which these states had objected. This violent tax collection action is known today as the Civil War.

Indirect taxes are also generally known as 'excise' taxes. These taxes tax transactions'things getting sold. Excise taxes tax the intersection of things (subjects) doing stuff (verbs) like getting sold. The federal income tax is an excise tax, not a direct tax. It does not apply to people. If you don't work, you don't pay. It applies only to people who do things that generate 'taxable income.'

A good vanilla example of an excise tax is the federal gas tax. It taxes 'gas' that is 'sold.' The subject of the federal gas tax is 'taxable fuels':

(a) Taxable fuel

For purposes of this Subchapter'

(1) In general

The term 'taxable fuel' means'

(A) gasoline,

(B) diesel fuel, and

(C) kerosene.

26 U.S.C. ' 4083.

The gas tax money-maker is section 4081, where its drafters link the subject (taxable fuel) with verbs, the taxable events (removal, entry or sale) that trigger the federal gas tax:

(a) Tax imposed

(1) Tax on removal, entry, or sale

(A) In general

There is hereby imposed a tax at the rate [18.4 cents per gallon] specified in paragraph (2) on'

(i) the removal of a taxable fuel from any refinery,

(ii)the removal of a taxable fuel from any terminal,

(iii) the entry into the United States of any taxable fuel for consumption, use, or warehousing, and

(iv) the sale of a taxable fuel to any person who is not registered under section 4101 unless there was a prior taxable removal or entry of such fuel under clause (i), (ii), or (iii).

In case there is any doubt about whether something mixed with gasoline is gasoline, the gas tax provides clarification:

(ii) any product commonly used as an additive in gasoline (other than alcohol).

For purposes of subparagraph (B)(i), the term 'gasoline blend stock' means any petroleum product component of gasoline.

Here is a Venn Diagram showing how section 4081 links taxable subjects with taxable activities and how easy it is when the subject and activities are clearly defined. The middle of the diagram below shows that gas that is subject to the tax'taxable fuel that is sold.

No gas station in America is confused about either the subject (gas) or the verb (a sale) of the federal gas tax. The taxing authorities have been able to clearly define what 'taxable fuel' means so that gas stations do not apply to tax to sales of thing like bread, bubble gum or soda pop. No gas station owner applies the 18.4 cent per gallon tax to the sale of products 'derived from' taxable fuel, things like petroleum jelly, tires or even motor oil.